Japanese chip makers begin recovery after devastation

Some companies are getting factories working again in the earthquake-hit northeast, but problems remain

TAIPEI, 18 MARCH 2011 - Some Japanese chip makers are starting to pick themselves up and resume operations in the earthquake and tsunami-torn northeast.

But while some factories are coming back online, there has been extensive damage at other plants, and ongoing power shortages remain a problem.

The good news is that companies are starting to put out good news. Up to now the focus has been on damage and devastation in Japan affecting the global technology supply chain. While some issues will remain a headache over the next several months, the fact that some plants are already resuming operations is a hopeful sign that the worst is in the past.

Shin-Etsu Chemical, the world's second-largest supplier of 300-millimeter (12-inch) silicon wafers, vital to chip production, has said that two of the four factories shut down after the earthquake are back up and running.

The company is still assessing damage at the other two factories. It is transferring production equipment from one to its plants elsewhere in Japan.

Silicon wafers are the raw material on which chips are etched. Japan supplies 72 percent of the world's 300mm silicon wafers, according to investment bank Credit Suisse.

Japanese DRAM maker Elpida Memory has said a chip testing and assembly plant located in northeastern Japan is back up and running after an initial closure caused by power outages related to the earthquake. The company said the facility was not damaged by the earthquake.

Both of these companies said power outages remain an issue.

The 9.0-magnitude earthquake and resulting tsunami knocked several power plants offline in northeastern Japan, according to Tokyo Electric Power Co. The company continues to work to restore power to companies and residents, and started rotating power outages from Monday due to a shortage of capacity.

Chip makers that actually fabricate chips, the sensitive etching work that takes the most time in chip production, would not be able to resume operations until the earthquake activity settles down in northeastern Japan, according to IHS iSuppli.

"Earthquakes ranging from 4 to 7 on the Richter scale will make it impossible to fully restart these fabs until the aftershocks stop happening with such frequency," IHS iSuppi said. "Every time a quake tops 5, the equipment automatically shuts down."

Northeastern Japan continues to be rocked by earthquakes, the latest a fairly strong 5.4-magnitude temblor Friday evening, according to the Japan Meteorological Agency.

Japan continues to recover after the biggest earthquake in its history. On Friday, the National Police Agency of Japan published dead and missing figures almost double the numbers from Wednesday. The number of people confirmed dead now stands at 6,539 with 10,354 missing. The tsunami spawned by the temblor swept away entire towns, leaving hundreds of thousands homeless, while an emergency at the Fukushima Daiichi Nuclear Power Station caused by the tsunami continues to plague officials in Japan.